by Hadley Malcolm, USA TODAY

by Hadley Malcolm, USA TODAY

An ultra-competitive holiday shopping season at the end of 2012 resulted in a 2% drop in Target's fiscal fourth-quarter earnings compared to the same period a year earlier.

Investors seem willing to accept the discount retailer's view that it can do better this quarter. In the report out Wednesday morning, Target forecast first-quarter earnings above what Wall Street expects and its adjusted fourth-quarter results topped consensus estimates.

Shares were down 1.2% in late morning trading after jumping 2% ahead of the market's open. Its 52-week trading range is $54.68 to $65.80 a share.

A weak holiday shopping season, which hurt many of Target's rivals' fourth-quarter financials, also hit the Minneapolis-based retailer. Its holiday partnership with high-end retailer Neiman Marcus was relatively unsuccessful, prompting some analysts to downgrade their ratings on the company's stock at the start of 2013.

Same-store sales, sales at stores open at least one year, for the fourth quarter rose 0.4%, missing the company's own expectations of a 2% to 3% increase; the total number of transactions the company completed fell 1%, though it says that was offset by a 1.4% increase in average transaction amount.

January clearance items helped boost monthly same-store sales, which were up 3.1% from last January, the company announced earlier this month.

Target CEO Gregg Steinhafel said he was happy with how the company ended 2012.

"We are very pleased with our fourth quarter financial performance...even though sales fell short of expectations," he said in a call with investors Wednesday morning.

Target earned $961 million, or $1.47 per share, for the period ended Feb. 2. That's down from $981 million, or $1.45 per share, a year earlier.

Removing certain items, such as interest costs tied to the company's U.S. credit card division and a set-aside for income taxes, fourth-quarter earnings came in at $1.65 per share, the company said. That topped analysts' forecast for earnings of $1.47 per share.

In 2013, Target plans to launch 124 Canadian stores, the first 24 by the beginning of April and 100 more by Christmas. It will also open three new CityTarget stores, smaller, urban retail store locations. The five that are already open are "seeing robust sales and traffic," Steinhafel said during the call this morning.

The company will also start testing same-day delivery and the ability for customers to order online and pick up merchandise in a store.